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Fiscal Year 1984 & 1985 February 21, 2986 I L L L L L MONROE COUNTY, FLORIDA MUNICIPAL SERVICE DISTRICT FINANCIAL STATEMENTS SEPTEMBER 30, 1985 AND 1984 I E 1 1 ' KEW & ROSASCO CERTIFIED PUBLIC ACCOUNTANTS E I ■■r CONTENTS ■■■` Page Independent Auditors' Opinion 1 r Financial Statements: [ Balance Sheets 2 ■■iii Statements of Revenue, Expenses and Fund Equity 3 ■ Statements of Changes in Financial Position 4 ' Notes to Financial Statements 5-7 Supplemental Schedules: Restricted Assets 8 Residential Waste Fees Assessed and Uncollected 9 Schedule of Insurance In Force 10 Management Letter 11-13 ■■ Bond Compliance Letter 14 1 1 1 1 KEMP ROSASCO Certified Public Accountants t 1438 KENNEDY DR. #12 WAN! PLAZA • P. O. BOX 1529 KEY WEST, FL 33041-1529 ORVIS M. KEMP, C.P.A. (305) 294-2581 MEMBER OF AMERICAN INSTITUTE WM. O. KEMP, C.P.A. AND FLORIDA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS PETER L. ROSASCO, Jr., C.P.A. MARVA E. GREEN, C.P.A. tJOSEPH W. HENDERSON, C.P.A. r Honorable Members of the ■i Board of County Commissioners Monroe County, Florida We have examined the Balance Sheet of the Monroe County, Florida Municipal Service District as of September 30, 1985 and 1984 and the Related Statements of Revenues, Expenses, and Fund Equity, and Changes in Financial Position for the years then ended. Our examination was made in accordance with generally accepted auditing standards and, accordingly, Included such tests of accounting records and such other auditing procedures as we considered necessary In the circumstances. In our opinion, the financial statements referred to above present fairly the financial position of the Monroe County, Florida Municipal Service District at September 30, 1985 and 1984 and the results of its operations and the changes in financial position of the Monroe County, Florida Municipal Service District at September 30, 1985 and 1984 and the results of its operations and the changes in financial position for the years then ended In conformity with generally accepted accounting principles applied on a consistent basis. Our examination was made for the purpose of forming an opinion on the finan- cial statements taken as a whole. The supplemental schedules of Restricted Assets, Residential Waste Fees Assessed and Uncollected, and Insurance in Force are presented for purposes of additional analysis and are not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the examination of the financial statements ' and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole. 1 Kemp R. Rosasco Certified Public Accountants February 21 , 1986 I M co OJ (71 M 1O N O m O Ol CT h. +O C N.3' h c O lO tO h C �O In N M ct a ors a r OC co co n OJ t'V to II1 u'i o+ •7 W m O M r VM't �V IT N V1 CO N N OJ •7 V'•- in h M W ♦A co W co O M M 10 IT N N of �D o]O M M O v .7 In M •7 st h I`• - to N In in. !Ll lO V N V' O CV O u't O C'v O to h M In M In OD in h co O N V O O N lO. lO of N In co N N h O N V k9 � M Q1 t O 4 O '1' •� t z L - + O E D d N v Ir- v m ,- 0 w m v � E D N U c c c L @ VI •- L i�{ � � m W N T } + } E N N.0O c � @D Tt O m O N E V A @ @ N U Vf C A V) V) O VI V @ 10 d D L @ T Q U1 + (D N N } N Z Nw L N v Ontf named C O } uj �- L @} U L U V -0C @ V C O C (0c C U @ Z C t @ L O .. Ly- J •- O@.0 @'O w+.. 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D—N w O + VI D@ U @ t O @ O W > 01 c } M_ VI C U} L L N > @ L A O @ w+ } } N C V @ @ L N I�JI V) L d}NUF) <}Icn +GO L ON rh L0N OEO ( < v d @ N 4- Q— N c d q @ 4- } d + m + - 0+ 9) U W }cb U c < CO E @ O Z F L L Ill O G 10 O1 }t N N L F C Q v Q Ul N @ c V @ 7 U U U c —< O �CJ cU d Jm W J I MONROE COUNTY, FLORIDA IMUNICIPAL SERVICE DISTRICT STATEMENTS OF REVENUES, EXPENSES AND FUND EQUITY LFOR THE YEARS ENDED SEPTEMBER 30, 1985 AND 1984 L1985 1984 Operating Revenues: L Special assessments $ 4,916,693 $ 4,612,666 General taxes 245,936 22,532 Charges for services 372,632 424,259 Franchise fees 222,136 271 ,223 IMiscellaneous 1 ,934630 Payments from other governments 14,142 31, 143 ITotal Operating Revenues 5,773,473 5,362,453 Operating Expenses: I Professional services 1,944,759 1,816,158 Personal services 1 ,195,016 1 ,312,740 Depreciation and depletion 778,071 725,568 Operations 503,419 778,297 Repairs and maintenance 399,254 433,012 I Total Operating Expenses 4,820,519 5,065,775 IOperating Income 952,954 296,678 I Nonoperating Revenue (Expense) : Interest income 472,118 466,829 Loss on disposal of equipment (10,087) (34,346) I Interest expense & paying agent fees (886,839) (883,361 ) Total Nonoperating Revenue (Expense) (424,808) (450,878) Income (Loss) Before Operating Transfers 528,146 (154,200) Operating Transfers (Out) (270,039) (263,539) IINet Income (Loss) 258,107 (417,739) Fund Equity, October 1 3,853,372 4,271 ,111 IFund Equity, September 30 $ 4,111,479 $ 3,853,372 IThe accompanying notes are an integral part of these financial statements. I 3- I I IMONROE COUNTY, FLORIDA r MUNICIPAL SERVICE DISTRICT L STATEMENTS OF CHANGES IN FINANCIAL POSITION EFOR THE YEARS ENDED SEPTEMBER 30, 1985 AND 1984 1985 1984 FSources Of Working Capital : i Operations: Net income ( loss) $ 258,107 $ (417,739) L Items not requiring working capital : Depreciation and depletion 778,071 725,568 Amortization of bond discounts 6,778 6,778 LLoss on disposal of fixed assets 10,087 34,346 ■i Working capital provided (used) by 1,053,043 348,953 operations Decrease in restricted assets 2,962,124 448,451 Proceeds from long-term note 123,555 - ITotal Sources of Working Capital $ 4,138,722 $ 797,404 Uses Of Working Capital : I ( Increase) Decrease in liabilities payable from restricted assets: $ $ 437,346 Accrued interest - 45,000 Revenue bonds I Matured principal 3,945,000 Matured Interest (698,850) - I Total Decrease in Liabilities 482,346 Payable from Restricted Assets 3,246,150 Retirement of long-term debt and I portions becoming current 178,555 60,372 Additions to property, plant R. equipment 390,555 251,189 Increase in working capital 323,462 3,497 ' Total Uses of Working Capital $ 4,138,722 $ 797,404 Increase (Decrease) in Components of I Working Capital :Cash $ 261 ,421 $ (142,472) Investments 657,359 (624,794) ------- -Due from other governments (36,789) 38,951 ' Accounts receivable (165, 8 ) 581,017 Accounts payable (26,510) 5,981 Other current liabilities (366,331 ) 144,814 IIncrease in Working Capital $ 323,462 $ 3,497 IThe accompanying notes are an integral part of these financial statements. I -4- I I MONROE COUNTY, FLORIDA MUNICIPAL SERVICE DISTRICT INOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1985 AND 1984 I L NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES General - The Monroe County, Florida Municipal Service District (the "MSD") is an instrumentality of Monroe County (the "County") authorized to Iown and operate solid waste collection facilities of the County. Basis of Accounting - The MSD follows the accrual basis of accounting. L Investments - Restricted investments consist primarily of U.S. Treasury obligations, carried at amortized cost which approximates market value. Temporary investments Included in current assets are invested in F cer- tificates of deposit or the Local Government Investment Pool which is administered by the State of Florida. Pooled funds are combined and invested with all County funds to the extent available. Earnings from I pooled funds are allocated monthly based on a weighted average balance of investments. Temporary investments are carried at cost which approximates market value. I Property and Depreciation - Property is recorded at cost. Expenditures for maintenance, repairs and minor renewals and betterments are expensed as incurred. Major renewals and betterments are treated as property acquisitions. Depreciation and depletion expense is provided on property and sanitary landfill sites using the straight-line method over the esti- mated useful lives of the assets as follows: I Description Years Sanitary landfill sites 1 - 10 I Buildings and other improvements 10 - 20 Machinery and equipment 3 10 ' The cost and accumulated depreciation of property dispositions are removed from the accounts with the related gain or loss on disposition reflected in net income. I Discount on Bonds Payable - The discount on Revenue Bonds Payable is amor- tized using the straight-line method over the maturity of the bonds. ' NOTE 2 - PENSION PLAN I The County participates in the Florida Retirement System (the "System") which covers substantially all of the County's full-time employees. Presently, the System does not require contributions from covered I employees. Pension costs for MSD employees for the years ended September 30, 1985 and 1984 as required and defined by the System, approximated $ 114,143 and $ 109,646 respectively. I 5- I I I MONROE COUNTY, FLORIDA MUNCIPAL SERVICE DISTRICT I NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1985 AND 1984 I NOTE 2 - PENSION PLAN (Continued) IContributions of all participating agencies throughout the State of Florida are pooled to fund accrued benefits under the System. System I officials have reported that the System has an actuarially computed unfunded past service liability of approximately $6.5 billion as of July 1 , 1983, the latest valuation date of the plan. This amount repre- sents an obligation of the System and not of the participating agencies. I The most recent actuarial study indicates that, if certain actuarial assumptions are realized and certain increases to the contribution rates are made, this unfunded past service liability will be liquidated within ' 30 years. I NOTE 3 - LONG-TERM DEBT Long-term debt consists of the following: I improvement Bonds, secured by revenues of 1985 1984 MSD which are obligations solely of MSD, payable in installments of various amounts I each October 1 until 2001 , the remainder due October 1 , 2011, bearing interest at 9.80 to 11.25% $ 7,810,000 $ 7,865,000 ' Unamortized discount 169,444 176,222 Net Improvements Bonds 7,640,556 7,688,778 ILease obligation, secured by equipment with a purchase cost of $ 123,555, pay- Iable in monthly installments of $ 7,284,including interest at 8.50%. 50,511 - Lease obligation, secured by equipment with a purchase cost of $114,660, pay- ' - able in monthly Installments of $5,283 including interest at 10.7%. 10,567 I Total long-term debt 7,691 ,067 7,699,345 Less current portion 50,511 10,567 INet long-term debt $ 7,640,556 $ 7,688,778 I -6- r I E MONROE COUNTY, FLORIDA MUNICIPAL SERVICE DISTRICT E NOTES TO FINANCIAL STATEMENTS SEPTEMBER 30, 1985 AND 1984 INOTE 3 - LONG-TERM DEBT (Continued) Long-term debt matures as follows: LSeptember 30 1986 50,511 1987 65,000 1988 70,000 I 1989 1990 80,000 85,000 t Thereafter 7,510,000 7,860,511 Less unamortized Idiscounts 169,444 Total long-term debt $ 7,691 ,067 I The improvement bonds are payable from special assessments (residential I waste collection fees) levied annually on residential properties within the MSD that are furnished solid waste collection services, including interest on such assessments, payments received from franchise solid waste collectors with respect to commercial property in the MSD, all other non- I ad valorem funds received by the MSD in connection with furnishing solid waste disposal services by the MSD, excluding any Federal and State funds received, and interest earned on funds received from providing such sar- i vices. The improvement bonds are payable solely from the revenues generated by the MSD and do not constitute a general obligation of the County. INOTE 4 - SUBSEQUENT EVENT, ADVANCE REFUNDING OF REVENUE BONDS By resolution adopted December 6, 1985, the County provided for the I advance refunding of the MSD Improvement Bonds in the principal amount of S7,810,000 by the sale of Monroe County Municipal Service District Service Refunding Improvement Bonds, Series 1985. All of the principal amount of Ithe Series 1985 Issue will be used to advance refund the refunded bonds. I I 1 MONROE COUNTY, FLORIDA MUNICIPAL SERVICE DISTRICT RESTRICTED ASSETS SEPTEMBER 30, 1985 AND 1984 I 1985 1984 Fund Description: Sinking Fund: F Cash $ 170,473 $ 7,633 i Reserve Fund: Cash 53,499 2,472 Investments 994,734 975,035 Interest Receivable 44,958 44,958 E 1,093, 191 1,022,465 ■ Renewal and Replacement Fund: Cash 1,745 Investments 299,608 247,403 ' 299,608 249,148 Cash with Fiscal Agent 2,202,543 5,488,693 Total Restricted Assets $ 3,765,815 $ 6,767,939 1 1 i 1 -8- t E L MONROE COUNTY, FLORIDA MUNICIPAL SERVICE DISTRICT L RESIDENTIAL WASTE FEES ASSESSED AND UNCOLLECTED SEPTEMBER 30, 1985 I Percentage Of L Year Of Total Fees Uncollected At Uncollected To Assessment Assessed September 30, 1985 Original Roll 1978 S 1 ,030,326 $ 21 ,780 2.1% E1979 1 ,155,744 18,369 1.6% t1980 1 ,135,332 25,322 2.2% 1981 1 ,516,547 31 ,147 2. 1% ■ 1982 1 ,553,913 34,512 2.2% 1983 2,217,262 73,826 3.3% 1984 4,818,700 621 ,225 12.9% I1985 5,078,265 410,378 8.1% ISub-Total 1 ,236,559 Less Reserve for Uncollectibles 636,727 I Net Residential Waste Fees Uncollected 599,832 IOther Receivables 19,145 Net Accounts Receivable $ 618,977 I I -9- I I LMONROE COUNTY, FLORIDA L MUNICIPAL SERVICE DISTRICT L SCHEDULE OF INSURANCE IN FORCE SEPTEMBER 30, 1985 L Amount LDescription of Coverages Carrier Policy Period of Coverage L Comprehensive Business Policy The Fidelity and 4/1/85 - Casualty Company 4/1/86 a. Fire, Windstorm, etc. of New York a. Major equipment- L replacement cost buildings, personal property 8 tanks- $ 567,700 b. Contractor's Equip. b. $ 667,024 c. Scheduled Property c. Data Processing Equipment- [ $ 350,953 d. Honesty Blanket Bond d. $ 100,000 I General Liability SIGNA/INA 3/15/85 - $ 500,000 (CSL) 3/15/86 I Auto Liability SIGNA/INA 3/15/85 - $ 500,000 (CSL) 3/15/86 •' Umbrella Liability Safety Mutual 3/15/85 - $ 1,000,000 Casualty Corp. 3/15/86 I Public Official International 4/19/85 - $ 1 ,000,000 Liability Surplus Lines 4/19/86 ' Worker's Compensation Self-Insured Continuing Statutory and Employer's Liab. Worker's Compensation Safety Mutual 10/1/84 - $ 5,000,000 ' Specific Excess Casualty Corp. 10/1/85 $ 1 ,000,000 Aggregate Excess I -10- I I KEMP 1$ ROSASCO Certified Public Accountants t 1438 KENNEDY DR. $12 LUANI PLAZA • P. O. BOX 1529 KEY WEST, FL 33041-1529 ORVIS M. KEMP, C.P.A. (305) 294-2581 MEMBER OF AMERICAN INSTITUTE f WM. O. KEMP. C.P.A. AND FLORIDA INSTITUTE OF PETER 1. ROSASCO, Jr., C.P.A. CERTIFIED PUBLIC ACCOUNTANTS MARVA E. GREEN, C.P.A. LJOSEPH W. HENDERSON, C.P.A. February 21 , 1986 Mr. Danny L. Kolhage Clerk Ex Officio Board of County Commissioners Monroe County, Florida Key West, FLorlda 33040 Dear Sir: We have examined the financial statements of Monroe County, Florida, Municipal Service District (MSD) for the years ended September 30, 1985 and 1984, and have Issued our report thereon dated February 21, 1986. As part of our exami- nation, we made a study and evaluation of the MSD's system of internal accounting control to the extent we considered necessary to evaluate the system as required by generally accepted auditing standards. The purpose of our study and evaluation was to determine the nature, timing, and extent of the auditing procedures necessary for expressing an opinion of the MSD's financial statements. Our study and evaluation was more limited than would be necessary to express an opinion on the system of Internal accounting control ' taken as a whole. The observations reported herein should be considered in the context of the reponsibi lity of management for establishing and maintaining a system of Internal accounting control , the objectives of and inherent limitations on such a system, and the definition of a material weakness for purposes of this report, which are described in the Appendix to this report. ' Our study and evaluation made for the limited purpose described in the first paragraph would not necessarily disclose all material weaknesses in the -system; Accordingly, we do not express an opinion on the system of internal accounting control of the MSD taken as a whole. However, our study and eva- luation disclosed no condition that we believe Is a material weakness. ' Our examination did, however, disclose the following condition that, although not considered by us to be material weaknesses, are weaknesses in internal accounting control for which corrective action might be taken. -11- I Mr. Danny L. Kolhage ` Clerk Ex Officio Board of County Commissioners E Page 2 Cash Receipts Records Observation: We were not able to trace a day's series of receipt forms issued for waste charges to a deposit, due to the format of the "daily re-cap". L Although daily procedures are functioning well and provide effective controls, they do not provide a sufficient audit trail. Recommendation: The "daily re-cap" should be modified to include the receipt numbers Issued and the series of validated transaction numbers used which relate to a bank deposit. Regulatory Reporting Requirements We have reviewed the financial report filed with the Department of Banking and Finance for the year ended September 30, 1985, pursuant to Section 218.36, Florida Statutes, and have found the amounts reported therein to be In agreement with the amounts included in the financial statements on which we ■■ have issued our report dated February 21 , 1986. ■ The Rules of the Auditor General , State of Florida, require that this letter be filed with the Auditor General along with audited financial statements. ' This report is intended solely for the use of management and the Auditor General and should not be used for any other purpose. ' w • • v • w ' We appreciate the cooperation extended to us during the course of our examina- ' Lion. We would be pleased to discuss these matters further with you at your convenience. Sincerely, Kemp A Rosasco Certified Public Accountants ' -12- 1 1 APPENDIX MANAGEMENT'S RESPONSIBILITY FOR, AND THE OBJECTIVES AND LIMITATIONS OF, r INTERNAL ACCOUNTING CONTROL AND THE DEFINITION OF A MATERIAL WEAKNESS LThe following comments concerning management's responsibility for Internal accounting control , the objectives of and the Inherent limitations on a system of internal accounting control , and the definition of a material weakness are excerpts from Statements on Auditing Standards of the American Institute of Certified Public Accountants. Management's Responsibility Management ... is responsible for establishing and maintaining a system of Internal accounting control. In fulfilling this responsibility, estimates and judgements by management are required to assess the expected benefits and �■^ related costs of control procedures. �I Objectives r The objectives of a system are to provide management with reasonable, but not ` absolute, assurance that assets are safeguarded against loss from unauthorized use or disposition, and that transactions are executed in accordance with management's authorization and recorded properly to permit the preparation of financial statements in accordance with generally accepted accounting prin- ciples. Limitations Because of inherent limitations in any system of internal accounting control , t errors or irregularities nevertheless may occur and not be detected. Also, projection of any evaluation of the system to future periods is subject to the risk that procedures may become inadequate because of changes in conditions or ' that the degree of compliance with procedures may deteriorate. Material Weakness ' A material weakness (for the auditor's purpose) is a condition in which the specific control procedures, or the degree of compliance with them, do not (in the auditor's judgement) reduce to a relatively low level the risk that errors ' or irregularities In amounts that would be material in relation to the finan- cial statements being audited may occur and not be detected within a timely period by employees in the normal course of performing their assigned func- tions. These criteria may be broader than those that may be appropriate for evaluating weaknesses in accounting control for management or other purposes. 1 -t3- I KEMP £4 ROSASCO Certified Public Accountants 1438 KENNEDY DR. #12 LUANI PLAZA • P. O. BOX 1529 KEY WEST, FL 33041-1529 ORVIS M. KEMP, C.P.A. (305) 294-2581 MEANER OF M ERII AN INSTITUTEITE I WM. O. KEMP, C.P.A. CERTIFIED PUBLIC ACCOUNTANTS PETER L. ROSASCO, Jr., C.P.A. MARVA E. GREEN, C.P.A. JOSEPH W. HENDERSON, C.P.A. Honorable Members of the Board of County Commissioners Monroe County, Florida We have examined the Balance Sheet of the Monroe County, Florida Municipal Service District as of September 30, 1985 and 1984 and the related statements of Revenues, Expenses, and Fund Equity, and Changes In Financial Position for the year then ended. Our examination was made in accordance with generally L accepted auditing standards and, accordingly, included such tests of accounting records and such other auditing procedures as we considered ■ necessary in the circumstances. fl In connection with our examination, nothing came to our attention that caused ■ us to believe that the Monroe County, Florida Municipal Service District was not in compliance with any of the terms, covenants, provisions, or conditions of section 15 of Resolution No. 215 which was adopted by the Board on August 26, 1980, as amended and supplemented. However, it should be noted that our examination was not directed primarily toward obtaining knowledge of such non- compliance . Kemp F. Rosasco Certified Public Accountants February 21 , 1986 1 14-